EXHIBIT 4.5
Date: ___________
RE: GRANT OF OPTIONS UNDER THE INTERNAL REVENUE CODE OF 1986 - 2005 PLAN
Dear: ________
We are pleased to grant you options ("Options") to purchase Ordinary
Shares, nominal value NIS 1.00 each (the "Shares"), of Tower Semiconductor Ltd.
(the "Company"), pursuant to the Employee Share Option Plan 2005 of the Company,
(the "Plan"), as of __________ (the "Date of Grant"), as follows:
1. Total Number of Options Granted _________________________
2. Type of Option:
[X] Option intended to qualify as an incentive stock option
("ISO") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended ("Code").
[_] Option not intended to qualify as an Incentive Stock Option
("NSO").
3. The exercise price of the Options shall be $________ per Share.
4. The Options are hereby issued (the "Option Award") to the Trustee (as
defined in the Plan) for your benefit, subject to the terms and
conditions hereunder and the Plan which we have posted on our website.
You are urged to review the Plan and shall be deemed to be fully aware
of all the terms and conditions governing the Options set forth in the
Plan. By your signature below, you agree to be bound by the terms and
conditions of the Plan.
5. Subject to the terms and conditions of the Plan and this letter, the
Options granted pursuant to this letter shall become exercisable
(vest) in accordance with the following schedule:
(a) ________ of the Options shall vest 12 months from the Date of
Grant;
(b) ________ of the Options shall vest 24 months from the Date of
Grant;
(c) ________ of the Options shall vest 36 months from the Date of
Grant; and
(d) ________ of the Options shall vest 48 months from the Date of
Grant.
6. The above Options will vest and become exercisable only if on the date
of exercise you are still employed by the Company. Vested Options may
be exercised in whole or in part, at any time within a period of ten
(10) years from the Date of Grant (the "Exercise Period"). Any Option
not exercised within the Exercise Period shall lapse and become void
and unexercisable. In addition, Options which are unvested at the time
of termination of your employment with the Company will become void
and unexercisable at the time of such termination. In addition, if
your employment with the Company is terminated voluntarily by you or
is terminated by the Company for any reason (other than as set forth
in the Plan), vested Options can be exercised by you within sixty (60)
days after your last day of employment with the Company. Thereafter,
such options shall lapse and become void and unexercisable.
7. The procedure for exercise of the Options shall be as detailed in the
Intranet. However, the Company may change the procedures for exercise
of the Options at its discretion. The Company will notify you of any
changes in the procedure.
8. Any tax consequences arising from the grant or exercise of any Option
Award, from the payment for Shares covered thereby or from any other
event or act (of the Company, its subsidiaries or you) hereunder, and
commissions and other expenses relating thereto shall be borne solely
by you. Furthermore, you shall agree to indemnify the Company and/or
any of its subsidiaries and/or the Trustee and hold them harmless
against and from any and all liability for any such tax or interest or
penalty thereon, including without limitation, liabilities relating to
the necessity to withhold, or to have withheld, any such tax from any
payment made to you. The Company and/or any of its subsidiaries and/or
the Trustee may withhold any taxes, expenses and commissions from the
exercise of the Options and/or the sale of the underlying Shares.
9. While we are not providing you any tax advice with respect to the
grant of Options, we understand that:
a. In the case of an ISO, the exercise of the Option, under
current applicable law that is subject to change, will not be subject
to U.S. federal income tax, although the excess, if any, of the Fair
Market Value (as defined below) of the Shares on the date of exercise
over the Fair Market Value of the Shares on the date of grant will be
included in computing the alternative minimum tax for federal income
tax purposes and may subject you to the alternative minimum tax in the
year of exercise.
b. The exercise of an NSO will be subject to U.S. federal income
tax liability (at ordinary tax rates) upon the excess, if any, of the
fair market value of the Shares on the date of exercise over their
exercise price. If you are an employee or a former employee, we will
be required to treat such excess as compensation income and withhold
from your compensation or collect from you and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise. We may refuse to honor
the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.
c. In the case of an NSO, if Shares are held for at least one
year after exercise, any gain realized on disposition of the Shares,
i.e. the excess of the sale proceeds over the basis in the Shares
(which will generally be equal to the Fair Market Value of the Shares
on the date of exercise), will be treated as long-term capital gain
for U.S. federal income tax purposes. In the case of an ISO, if Shares
transferred pursuant to the Option are held for at least one year
after exercise and for at least two years after the Date of Grant, any
gain realized on disposition of the Shares will also be treated as
long-term capital gain for U.S. federal income tax purposes. If Shares
purchased under an ISO are disposed of within one year after exercise
or within two years after the Date of Grant, any gain realized on such
disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the difference between the
lesser of (1) the Fair Market Value of the Shares on the date of
exercise, or (2) the sale price of the Shares and the exercise price.
Any additional gain will be taxed as capital gain.
d. In the case of an ISO, if a Grantee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or
before the later of (1) the date two years after the Date of Grant, or
(2) the date one year after the date of exercise, such Grantee shall
immediately notify the Company in writing of such disposition. You
agree that you may be subject to income tax withholding by the Company
or the Subsidiary on the compensation income recognized by you.
e. In the case of an ISO, the Option shall not be considered an
ISO to the extent that the aggregate Fair Market Value (determined at
the time each ISO is granted) of the Shares with respect to which
Options designated as ISOs are exercisable for the first time by you
during any calendar year exceeds $100,000 or if you own shares
representing more than 10% of the voting power of the Company or the
Subsidiary ISO's at the time of the Option Award; such Options shall
be treated as NSOs. Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the Shares
shall be determined as of the time the Option with respect to such
Shares is granted. For the purposes of this letter, "Fair Market
Value" means the last reported sales price of the Company's Shares as
reported by NASDAQ or the principal national securities exchange upon
which the Company's Shares are listed or traded.
f. You are hereby informed that other and/or additional tax
consequences may be applicable to you with respect to the particular
circumstances relating to the grant or exercise of any Option Award or
from the payment for Shares covered thereby or from a change in your
residence or from any other event or act under applicable law, and the
above provisions are not a comprehensive description of all tax law
provisions which may apply to you and do not replace professional tax
advice in these matters.
10. The Options pursuant to this letter will be issued once you sign and
return to the Company: (I) this letter and (II) any other form which
is required under applicable law and which will be provided to you by
the Company. The forms referred to above must reach the Human
Resources Manager only, no later than ________ on 15:00. No options
will be granted to you if the forms are not returned by such date. If
you are unable to return the forms by such date, you may contact the
CFO or VP, Human Resources of the Company, who is authorized, at
his/her discretion, to extend such date, but in any event no later
than ________.
11. All notices, consents and other communications under this Agreement
shall be sent in writing and shall be deemed to have been given when
(a) delivered by hand, (b) mailed by certified or registered mail,
return receipt requested or express delivery service, or (c) when
received by the addressee, if sent by Express Mail, Federal Express or
other express service, in each case to the appropriate addresses set
forth below (or to such other addresses as a party may designate as to
itself by notice to the other parties).
(a) If to you, at your address listed beneath your signature
below;
(b) If to the Company: Human Resources Department, Tower
Semiconductor, P.O. Box 619, Migdal Ha'emek, Israel;
(c) If with respect to Option exercise procedures:
TAFM@TAMFISH.COM or facsimile no.: 972-3-6853773.
Sincerely,
Tower Semiconductor Limited
I HEREBY ACKNOWLEDGE THAT A COPY OF THE PLAN HAS BEEN POSTED ON THE
COMPANY'S INTRANET AND REPRESENT THAT I AM FAMILIAR WITH THE TERMS AND
PROVISIONS THEREOF, AND HEREBY ACCEPT THIS OPTION SUBJECT TO ALL OF THE TERMS
AND PROVISIONS THEREOF. I FURTHER ACKNOWLEDGE THAT I AM AWARE THAT (I) THE
COMPANY INTENDS TO ISSUE ADDITIONAL SHARES AND OPTIONS IN THE FUTURE TO VARIOUS
ENTITIES AND INDIVIDUALS, AS THE COMPANY IN ITS SOLE DISCRETION SHALL DETERMINE;
AND (II) THE COMPANY MAY INCREASE ITS SHARE CAPITAL BY NEW SECURITIES IN SUCH
AMOUNT AS IT FINDS EXPEDIENT; AND I HEREBY WAIVE ANY CLAIM I MIGHT OR MAY HAVE
REGARDING SUCH ISSUANCE OR INCREASE. I HAVE REVIEWED THE PLAN AND THIS OPTION IN
THEIR ENTIRETY, HAVE HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO
EXECUTING THIS OPTION AND FULLY UNDERSTAND ALL PROVISIONS OF THE OPTION. I
HEREBY AGREE TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR
INTERPRETATIONS OF THE BOARD OF DIRECTORS UPON ANY QUESTIONS ARISING UNDER THE
PLAN OR THIS OPTION. I FURTHER AGREE TO NOTIFY THE COMPANY UPON ANY CHANGE IN
THE ADDRESS INDICATED BELOW.
Name of Employee: ___________
Date: _____________
Employee signature: _____________________
Employee Social Security number: ___________________
Employee address: _____________________